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A comprehensive checklist created from the Financial Conduct Authority’s Handbook and combined with best practice material to deliver over 400 Accountability compliance safeguards.
Risk of significant harm
The Certification Regime replaces the Approved Person’s Regime and applies to relevant authorised persons who perform any of the defined significant harm functions. Under this regime, employees should only perform such a function if they have been issued a certificate by the firm when it is satisfied that the person is fit and proper to perform that function.
Each certificate is valid for 12 months and must be renewed upon anniversary, if rejected the firm should consider whether it is necessary to let the FCA know. This only applies to employees of the firm and there are certain short term allowances.
Fit and proper test
The fit and proper test, otherwise known as “FIT”, is a benchmark used to assess an individual’s suitability to perform a specified function and forms the basis for the Certification Regime. There are three sections; Honesty, Integrity and Reputation; Competence and Capability; and Financial Soundness. Firms are now responsible for self-certification.
These rules aim to identify individuals with poor conduct records, with applicants potentially subject to damaging references which they have not been able to contest. Regulated firms have to comply with the new rules for all candidates being recruited into relevant functions.
They will be required to seek references from all previous employers in the last six years, provide references in response to requests from authorised firms and provide an updated reference to an individual’s current employer.
Whilst people guilty of misconduct should be prevented from hiding their past, former employees should also be afforded a right to reply. However, if a former employee is invited to comment before their reference is updated, their ability to respond may be restricted particularly without legal funding.
It is quite possible that references could be updated with information that has not been carefully verified, which makes adherence to regulatory commitments and ensuring fair play a difficult balancing act.
Solvassure. Compliance Technology.